Pay up faster, supermarkets urged

Monday 13 October 2008 19.01 EDT
First published on Monday 13 October 2008 19.01 EDT

The big supermarkets and food manufacturers were told by ministers yesterday to speed up payments to their suppliers to help them survive the credit crisis.

Hilary Benn, the environment secretary, met leaders of the main food chains to emphasise that small businesses were far more dependent on the timing of payments than larger companies.

"A single late payment can be the difference between survival and collapse. That will be truer now more than ever in the coming weeks and months," Benn said after the meeting in London. Small businesses and farmers were the lifeblood of the food industry and should be helped through "turbulent times".

The government has already promised it will work to help get payments to small business suppliers more promptly. It recognises that contracts are a commercial matter for supermarkets, suppliers and producers but has become concerned that small companies will be more reliant than ever on prompt payment.

The Federation of Small Businesses welcomed Benn's intervention. Major companies should pay "not only on time but well before time", given the service they received from suppliers and producers, said a spokesman.

"It would be criminal if supermarkets improved their cash flow on the backs of small suppliers," he said.

The National Farmers' Union (NFU)said anything Benn could do to ensure prompter payments would help. "It would also be welcome if ministers emphasised the importance of sourcing food from Britain rather than abroad," said Lee Woodger, head of NFU's food chain unit.